What happened
Few cryptos are seeing the kind of appreciation Stacks (CRYPTO:STX) is seeing of late.
As of 2:45 p.m. ET, this blockchain project surged 10.9% over the past 24 hours. This move brings the cryptocurrency’s overall year-to-date gain to nearly 320% at the time of writing. This is also a token that’s officially surged past the $1 billion mark, taking a top-50 spot in the crypto rankings by market capitalization.
Not bad for less than two months of work.
So what
The incredible hype around non-fungible tokens (NFTs) in 2021 has all but dissipated. That said, there are still pockets of the NFT market that have provided investors with impressive gains, or at least the prospect for such gains.
Bitcoin‘s (BTC -1.74%) Ordinals Protocol, which went live on Jan. 21 and allows NFTs and other digital art to be inputted into transactions on the Bitcoin blockchain, has created significant buzz. As a companion chain, with embedded smart contract technology aimed at Bitcoin, Stacks appears to be the behind-the-scenes way for investors to play this newfound surge in Bitcoin utility.
Now what
Why it took so long for Bitcoin to adopt NFTs is anyone’s guess. However, considering the initial success of this rollout, there appears to be plenty of interest to go around. Stacks is continuing to see far greater upside momentum, as many investors appear to be looking to play the technology behind the push, rather than the assets themselves.
I’m of the view that NFT technology is likely to play a long-term role in both value storage and blockchain-based utility (being able to do things with crypto) over the long term. The adoption of this technology by the Bitcoin network appears to be a step toward creating more value for end users.
Accordingly, with so much value attributed to Stacks in such a short amount of time, this is a difficult token to value at these levels. Investors may want to be wary of a rally that may be potentially overdone — there may be a cooling-off period needed before the next leg higher.
Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
